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View Full Version : Car-scrapping initiatives in general...


airship
23rd Apr 2009, 13:39
The French have been doing it for donkeys' years, the Germans are also at it and even the Brits have most recently joined their ranks (http://news.bbc.co.uk/2/hi/business/8012492.stm)...?!

I think I understand the basic principles involved behind all such schemes:

1) To encourage new car sales with taxpayer-funded 'initiatives' thereby indirectly-subsidising the car manufacturers.

2) To remove older, less fuel-efficient cars from today's roads as part of the battle against global-warming.

Apart from the usual concerns involving moral hazard where our elected politicians are somehow almost always rewarded individually or on a groupage basis for all their help to business in one way or another, I was wondering just how exactly governments actually operate and manage car-scrapping schemes?

Because, it would appear to me that superficially at least, there might be ample scope for wide-spread fraudulent manipulation and activity...?!

If any 10 year old UK banger is ostensibly worth £2,000 now, if it were used against a new car purchase, does that mean that all >10 year old UK cars are today worth a minimum of £2,000, (less the discount that any new car buyer is willing to pay if they haven't their own >10 year old car available to scrap)...? By putting a base 'floor-price' on older cars, doesn't that somehow diminish any 'higher objectives' of removing older, less fuel-efficient cars from today's roads as part of the battle against global-warming...?

And when a car qualifying under the car-scrapping initiatives 'is scrapped', just what does that involve? Could the UK car ostensibly 'scrapped' be re-exported to say a French company as 'scrap', but somehow be recovered and then reused somehow as 'another car qualifying under that country's car-scrapping initiative', ad infinitum? :confused:

Whatever, those who are obliged to own 10 year old cars are not usually those that can afford to buy brand new cars, even with a £2,000 incentive. And presumably, all the others who could afford to replace their cars every couple of years, don't own 10 year old cars. So, what's the real point, unless governments involved are already aware that their initiatives will involve a lot of fraudulent activity but will nevertheless help new car manufacturers...?! :confused: :uhoh:

(corrected for some quite atrocious spelling mistakes which were sure to attract Rainboe's attention)

Sprogget
23rd Apr 2009, 13:42
It's worked very well in Germany, apparently.

frostbite
23rd Apr 2009, 14:49
My 10yo Mondeo is worth more than £2000 to me, and I have never owned (or wanted) a new car.

Mr Grimsdale
23rd Apr 2009, 15:55
It's worked very well in Germany, apparently.


Did it?
BBC NEWS | Business | Germans wary of car scrapping scheme (http://news.bbc.co.uk/1/hi/business/8003508.stm)
It would seem there are one or two issues.

What's to stop you or I purchasing any old banger for a hundred quid and then taking it to a dealership and getting £2000 for it when trading it in?

Captain Stable
23rd Apr 2009, 15:57
2) To remove older, less fuel-efficient cars from today's roads as part of the battle against global-warming.is a total nonsense. The extra carbon involved in building a new car far outweighs several years' worth of the difference in engine efficiency.

All this is about is subsidising the car industry.

What we REALLY need is a co-ordinated public transport policy that makes it preferable to take the bus or train instead of driving.

anotherthing
23rd Apr 2009, 16:00
Gonna trade in my 10 year old 1.1 litre engined runabout and buy me a big ol' 4x4.

That'll put paid to the 'greener' argument.

G-CPTN
23rd Apr 2009, 16:19
I can imagine 'better off' families (with several cars, including a ten-year old vehicle used for taking rubbish to the tip or something similar) cashing-in on this scheme.
You have to have owned the old car for at least twelve months BTW.
The rest of society that trundles around in 10 year old cars (because they can't afford better) are unlikely to be in a position to splash out on a brand new car that will lose £2000 as soon as it is driven out of the showroom.

OK, there might be a few, but not significant quantities IMO . . .

And, as has been pointed out, anyone wanting to buy a new car now could probably negotiate a discount of at least £2000 off the price.

DonaldSam
23rd Apr 2009, 16:25
Do you think the GOV might start giving everyone £2000 toward a new A/C so that it's more environmentally friendly!!! :):):)

MadsDad
23rd Apr 2009, 16:27
What's to stop you or I purchasing any old banger for a hundred quid and then taking it to a dealership and getting £2000 for it when trading it in?

One of the conditions for the proposed scheme is the banger has to be registered to you for at least 12 months before you can claim your £2k. Also the government is only going to be providing half the money, the car manufacturers are expected to produce the other half.

Will this money be on top of any other discount you can negotiate on the list price (which is apparently considerable at the moment) I wonder?

er340790
23rd Apr 2009, 18:38
I was interested to see the UK scheme is termed 'scrappage'.

Nice word that. New words based on short, old Anglo-Saxon ones are always good.

I see the French are calling their scheme 'prime a la casse'....

I bet within 3 months that becomes 'le scrappage'. :}

G-CPTN
23rd Apr 2009, 19:11
And who gets to scrap the vehicles?
Owner?
Dealer?
What chance a few turning up at the auctions?
Be a shame to scrap a perfectly good motor . . .

G-CPTN
23rd Apr 2009, 20:40
I've just returned from a walk through the centre of our village. It is a fairly prosperous area. Parking is at a premium with all streets having one side continuously occupied. During the day all parking is time-restricted and pay-and-display (or resident permit). At 9pm all parking spaces were full.

I was surprised that 45% of all vehicles were at least ten years old - and none were what you might describe as 'bangers' - all seemed (at least visually) to be in good condition.

Admittedly, many are probably owned by people living in the smaller terraced houses (whereas other residents would have their own off-street parking) so the sample isn't necessarily representative of the total village vehicle population (though larger houses with youngsters would have older vehicles for the teenagers - it's not that affluent an area).

I doubt that the scrappage scheme will see these older vehicles disappear as they seem to be well-looked after and capable of some years more. I didn't count the number older than fifteen years but there seemed to be quite a few.

Oh, and these aren't 'prestige' plates - I only saw one that would have been (and that isn't a local vehicle).
Maybe another time I'll do a detailed count of age of registration (most are regulars - especially at night).

So where are these 'scrappage' cars going to come from?
I doubt that the 'social housing' estates will be rushing to buy new cars (even with £2000 off).

How many people here are likely to 'take the shilling'?
My vehicle is Xreg - but I don't imagine myself spending £18-20,000+ to get an equivalent model . . .

Dushan
23rd Apr 2009, 21:03
How about this:

I go and buy a bunch of scrappers for $100 each. I have a place to store them, long term (this excludes most of Europe and urban areas, but would work well in North America and OZ)...

I then place ads in the paper saying that if you invest $1,000 with me for a year I will get you $2,000. For a $1,000 you get the car and register it in your name. I store it for you for a year after which you take it to the dealer and get $2,000 rebate.

helimutt
23rd Apr 2009, 21:05
So my little battered old 9 yr old fiesta, worth about £500 on a good day, next year suddenly increases in value, and I could go and negotiate a deal on say a cheap new KIA (not that i'd want a KIA) for £5000, then trade my old car in and only pay £3000? Surely that isn't what they're saying? What's the catch? Is there a minimum new car price i'd have to pay or is it really as good a deal as it sounds?

frostbite
23rd Apr 2009, 21:55
is it really as good a deal as it sounds?

Nope.

There's a limited amount of money being put into the scheme. I saw £30K quoted somewhere but I don't know if that's accurate.

G-CPTN
23rd Apr 2009, 22:12
Another location is advertising FIATs for £4995:-
Fiat.co.uk | GOVERNMENT CAR SCRAPPAGE SCHEME (http://www.fiat.co.uk/Content/?id=17415&campaignid=027_Q2_SCRAPPAGE_network_090422_090931&advertiserid=b3&bannerid=panda_728x90_cpm&s3c_channel=internet&s3c_competitor=none&s3c_model=panda&s3c_event=scrappage&s3c_type=banner&s3c_period=090422_090426&s3c_t)

(note that all calculations are based on list price, not the negotiable price that you could expect to pay if there wasn't any government scheme. Plus, you lose the value of your trade-in.)

Cheerio
24th Apr 2009, 11:12
I can't think of any other contemporary measure of desperation that so neatly encapsulates the stupidity of the whole system.

Allegedly:


1) The roads are overcrowded (lets tax people onto public transport)
2) Cars damage the environment (lets tax them out of existence)
3) We are running out of oil (lets tax them out of existence)
4) We can't be bothered to police the roads properly (lets fine them out of existence)
5) Tax, tax, tax, fines, fines, etc.

So, the whole idea of car ownership was being touted as polluting and antisocial.

Why did people stop buying cars? Because the government engineered a situation where the backbone of new-car-buying private car ownership, those who change every 3 years, are looking at serious negative equity on the loans they fund the cars with. Most people won't get burned twice. So, instead of turning in a perfectly acceptable car for the latest model in return for a sustainable monthly outgoing, people are typically staying away from showrooms and sticking with their existing, at least until the negative equity is worked off. The government has effectively weaned people off buying cars, instead of weaning them off using them. Idiots.

So now, with the double whammy of soaring oil price last year, carbon related taxation, the credit crunch was the icing on the cake. For typical regular new car buyers, there never was a problem with credit, but they witnessed a bloodbath in their equity. In that environment, you walk into a showroom, hear the bad news about what your 3 year old car is worth, and disappear, with little incentive to return.

Scrappage is such a stupid idea, it proves that we in the UK are governed by incompetents. We fund a raft of cheap Korean and bottom rung Euro (but no UK built) models onto the roads, increase the level of long term borrowing amongst the lower income higher risk sector, further inhibiting their disposable income for use elsewhere in the economy.

We pollute by scrapping cars, we pollute by building cars.
But now, we tax existing drivers to fund a horde of new cars onto the road, to be funded by new borrowing. Be in no doubt, it isn't the 'government' who is funding this 'initiative', it is you and me.

So we are taxed as a disincentive to buy, yet we provide incentives to buy? Crazy.

I'm not disposed to flights of Bilderberg conspiracy fancy, but simply put it down to astonishingly incompetent management. However, you have to ask, who benefits from this scheme. It isn't the populace or the real economy.

At a guess, I'd say: Increased tax revenue, increased borrowing to international banks, and Far Eastern car manufacturers.

The only winners in the UK are scrap dealers and car salesmen. Hardly the backbone of the economy. The net outcome will be a flood of money out of the UK, and massively increased levels of personal debt in a new sector of the poulace who can least afford it. It's verging on criminal.

MagnusP
24th Apr 2009, 11:34
Daft idea, really. Apart from the dubious green credentials of the scheme, how are kids going to get their first car? No-one is going to flog their old car for £500 to a neighbour's kid when they can get 2 grand FROM YOU AND ME by trading it in.

Mr Grimsdale
24th Apr 2009, 12:18
G-CPTN and MadsDad...
What's to stop you or I purchasing any old banger for a hundred quid and then taking it to a dealership and getting £2000 for it when trading it in?

Thanks for clearing that up. I thought there must be something to stop that little wheeze but had not seen it any report on the budget.

Standard Noise
24th Apr 2009, 15:53
I suppose there'll some sort of small print saying you have to have owned the car before the date of the budget or summat similar. Be interesting to find out though.
My question is, will the date set for the cars to be over ten years old be a rolling date or will they have a set date? Remember that these are the people who introduced a zero rate of VED for cars over 25 years old and then fixed the date (to somewhere in 1973 if memory serves) when they found out how much money they would lose out on.

G-CPTN
24th Apr 2009, 16:38
Walking past a local franchised dealership. New vehicle outside the showroom showing 'before' and 'after' prices exactly £2000 apart (obviously highlighting the effect of the government scheme) whilst inside new cars were plastered with stickers showing £1941 off the same model (or, more precisely 'save' £1941) so what you actually get is £60 (£59) for 'trading in' your 10plus year old vehicle.

Cheerio
24th Apr 2009, 17:04
I got an email yesterday from Volvo offering me over 4 grand off a new C30 if I trade in a 'banger' (Yeah right - I think they ought to know what I have, generally banger owners aren't on their mailing list... :hmm: and if they think its a banger already.... well I'll not be buying another!)

The thing is, about 3 months ago, With a few clicks, I easily managed to find a new, unregistered Mercedes A150 for my sis at 30% off list.

All this scheme will do, is draw the gullible into the doors of a dealer offering 'easy terms'.

Irresponsible government.

G-CPTN
24th Apr 2009, 17:23
A question is, can the dealers provide borrowing facilities to cover the 'finance' that most dealers assume that customers will accept (at inflated rates)?

pzu
25th Apr 2009, 20:29
see link below, this concludes that like most of Gordon's schemes (apologies to Mr Darling) it will cost money (yours)

"The car-scrappage scheme will cost most people more money and save them nothing."

Car-scrappage scheme will cost you money! (http://www.lovemoney.com/news/household-bills/carscrappage-scheme-will-cost-you-money-3396.aspx?source=1000020)

PZU - Out of Africa (retired)

RJM
25th Apr 2009, 22:21
There's a name for the process of a government distorting a market with a subsidy that doesn't benefit the party intended.

That's apart from wasting most of the historical inputs of material, energy, capital and labour that have gone into the car.

In accountancy terms, when you scrap a car you ascribe to those inputs a present value of the scrap or landfill value. If the car is still safe and usable and can be operated economically, then its PV is higher than its scrap value and should be compared to its replacement value or to the cost of alternative transport for the distance covered.

My car is quite old but is safe and cheap to run. Admittedly our climate is dry and friendly to cars. I am about the fifth owner, and I consider the higher emissions of the older engine well offset by the recycling as transport of the car and the saving of the inputs of a new car.

That's all good as long as you don't accept that cars or any other product should have designed obsolescence in order to force a repurchase.

My car was built in 1954, btw, and is in as good a condition now than it ever has been, and it's as safe as my driving.

corsair
25th Apr 2009, 22:38
Worked for me, we had it for a few years here. There were some seriously dangerous things on the road. The scrappage deal and the availability of easier credit meant lots of people went for it. In my case, my car was badly damaged by an idiot. No one would give me a loan for a second hand car. But perversely it was easy to get finance for a brand new car. The scrappage deal made it easier.

That I presume is the purpose of the idea in Britain too. Sell more new cars and prop up the industry by making it possible for people who previously wouldn't have considered a new car to buy one.

Some dealers here still do it, even offering 3k on a trade in no matter what it looks like or how long you own it.

hellsbrink
26th Apr 2009, 02:19
Yea, Corsair, but when you consider how much so many people in the UK are not only in hock up to their earholes but are also being taxed, both nationally and locally, then you can guess how many could afford a new car anyway. Then add in how those who "can" are not because they are not spending money on anything apart from essentials in case they lose their job, etc.

Oh, and since the UK scheme will only run until March 2010 you can see that it is just a gimmick

Standard Noise
26th Apr 2009, 02:29
The whole thing is a bit pointless, even if you have some dosh for a 'new' car, why take your 10 year old banger to a dealer to get this £2K 'scrappage' when you could walk in with the cash on a Friday afternoon at the end of the month and wave it in front of the dealer's nose. If they're that desperate, they'll take it. We did that last summer and got a 'premium' brand car for £1500 off the screen price (which was already £2.5K under what the list price was meant to be). And that was before the current financial crisis supposedly kicked in.
Better off haggling with a dealer while fluttering the cash (or agreeing to their finance terms) and selling your banger to some other pillock willing to pay over the odds for it so they can get the 'scrappage' saving.

Having just bought a 7.5 year old car that has all the toys for £22K less than it cost new, I don't care. Give me a bit of luxury on an older car than a tinny Eurobox anyday. Who cares if it belonged to someone else first.

belfrybat
26th Apr 2009, 04:53
My car was built in 1954, btw, and is in as good a condition now than it ever has been, and it's as safe as my driving.

Dammit, got me beat. Mine's from 1977 and I bought it 1992. By my reckoning the annual cost of maintenance is lower than changing it, so I just can't bother. Besides, I like it very much and it's unlikely I'd find something better at a reasonable price.

Capot
26th Apr 2009, 07:22
I couldn't understand the scheme when it was proposed, I've read the thread, I still don't.

So it applies to new car, or nearly new car sales only. I would have thought, as some have suggested, that the £2K will simply give back to the dealer some of the huge discount he would have given you anyway along with a value for the PX banger.

For that reason no sales will be generated by the scheme that would not have happened anyway. How exactly does that benefit the makers, and even if it does, is the scheme limited to sales of cars built in the UK? Or are we helping out the South Koreans with our tax payments?

The manufacturers are pumping out production as though there is no problem; there are hundreds of thousands of new cars stored all over the country awaiting a sale that will never happen as thousands of newer and cheaper cars join the storage sites every day.

The simple fact is that the small proportion of people, mainly privatised utilities, financial and legal firms and car hire operators, who "change their cars every three years" largely because their stupid staff see that as an essential status symbol have stopped doing that and rightly so. Any car these days has a life of at least 10 years and 150 - 250,000 miles, probably twice that.

Too many cars are being built. Mostly in other countries and imported into Britain. It's a simple as that. But good old Gordon's economic wizardry thinks that this unnecessary production must be subsidised by the taxpayer, to gain a few populist votes because some adviser (Damien Green?) has told him the "British People Love Their Cars".

So what was the scheme supposed to achieve?

G-CPTN
26th Apr 2009, 10:51
If you look at vehicle production and sales over recent decades, they have been increasing steadily. Of course this reflects both growing ownership as well as improving 'quality of ownership' (ie motorists choosing to run newer vehicles).
However, quality of production has also improved and vehicles last longer than they did decades ago.
There has to be a point where saturation of the market occurs when motorists realise that they don't have to change their vehicle for a newer one (this applies to vans as well as cars). No doubt some people will be attracted by the apparent bounty of £2000, but, IMO many will 'make do and mend' as we were encouraged to do in the immediate post-war period (when industry was struggling to recover by exporting as much as possible).

unstable load
26th Apr 2009, 11:28
I read things like this and wonder whether I'm not actualy better off with the idiots I have for govenment in sunny South Africa.
My 1975 Rover P6 and I are very happy with each other's company, thank you!

hellsbrink
27th Apr 2009, 06:14
A nice little loophole in Alastair "in Wonderland" Darling's plan for getting rid of a few old cars and making some money for Renault/VW/FIAT/et al...

Loopholes in the Government’s car scrappage scheme will allow wealthy drivers to trade in non-running wrecks and obtain £1,000 from the taxpayer towards a new sports car, 4x4 or luxury saloon.
Owners of cars that have no MoT certificate and are sitting rusting in backyards are eligible for grants if a statutory off-road notification (SORN) has been made......
.....The Department for Business, Enterprise and Regulatory Reform stated that the vehicle being scrapped must have been registered for at least a year to the driver seeking the grant and have a current MoT certificate but a department official admitted to The Times that if the driver completed a SORN, the car would not require an MoT certificate, tax disc or insurance......
Car scrap loophole will turn worthless wrecks into cash (http://www.timesonline.co.uk/tol/driving/article6175059.ece)

MadsDad
27th Apr 2009, 07:14
walk in with the cash on a Friday afternoon at the end of the month and wave it in front of the dealer's nose

The dealer will like that and you will be able to negotiate a discount but you will probably be able to negotiate a better discount if you are buying on credit arranged by the dealer. Sounds a bit odd but it's because the dealer will make some money off the finance arrangement and can factor that into the deal as well.